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BTL business. Starting capital.

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    #11
    This is generally interesting topic,
    however what are the benefits of moving your assets to LTD?

    What I was thinking of doing instead is to rent properties to my company and the company collects the rent, structuring rental income (to yourself) in beneficial way.
    Say you are in higher tax bracket, then you let your properties only for minimal rent to your LTD equal to any claimable deductions, and LTD sublets to people...

    Good thing about this model is you can take personal mortgages (which are cheaper) and if needed pull profits from rental via dividends
    Would that work ?

    Comment


      #12
      Originally posted by anim View Post
      Explain please.
      If you put £100k capital into the company rather than loan it... when you finally sell up for say £150k, you only have £50k of capital gain.
      See You Next Tuesday

      Comment


        #13
        Originally posted by anim View Post
        So 2 scenarios here:

        a property of now £100k (bought for £90 personal) (sold for 110k in 5 years by LTD).
        - gifted - 19% corp tax on £110k is owed. ~ £21k
        - sold to LTD - stamp duty = £3.5k, no personal CGT. Plus 19% corp tax on £10k. ~£5.4k

        Seems like a no brainer, but can anyone validate the cases above?
        I think it may be more complicated than that. There would be CGT on you if you gifted the property to your company (subject to your annual exemption) and there would also be SDLT (even if the company paid nothing). The company would also get a deemed market value base cost on the gift (so not the CT that you suggest). If you don't own the whole company, you have to think about IHT too as a gift would (depending on the amounts and your circumstances) create an immediate IHT charge.

        Comment


          #14
          In general it is better to run BTL through a LTd co.
          BUT
          It is not for everyone.
          You must engage with your accountant.
          Intra company loans would probably work in the OP's case of he has enough dosh in the company.
          HOWEVER
          we have the biggest BTL hating government at the moment and things may change at Autumn statement/budget.
          There are a lot of residential landlords pulling out at present because of this.
          Remember lots of BTL favourable tax loopholes have been closed.
          The current social situation re evictions is also a issue if you land problem tenants.
          I am advertising more residential portfolio's than ever at the moment mostly north of Milton Keynes. Many of these are well BMV.
          For the benefit of another poster it is legal to sell at BMV but not stupidly BMV and there has to be a genuine reason for the BMV sale.
          Former IPSE member
          My Website

          Comment


            #15
            Originally posted by GitMaster69 View Post
            This is generally interesting topic,
            however what are the benefits of moving your assets to LTD?

            What I was thinking of doing instead is to rent properties to my company and the company collects the rent, structuring rental income (to yourself) in beneficial way.
            Say you are in higher tax bracket, then you let your properties only for minimal rent to your LTD equal to any claimable deductions, and LTD sublets to people...

            Good thing about this model is you can take personal mortgages (which are cheaper) and if needed pull profits from rental via dividends
            Would that work ?
            Cough *GAAR* cough...
            See You Next Tuesday

            Comment


              #16
              Originally posted by Lance View Post
              Cough *GAAR* cough...
              that approach is illegal ? What if i let my properties to my limited and limited would do Airbnb?

              Comment


                #17
                Originally posted by GitMaster69 View Post
                that approach is illegal ? What if i let my properties to my limited and limited would do Airbnb?
                That's fine. It's the dicking around with the tax that's aggressive.
                'CUK forum personality of 2011 - Winner - Yes really!!!!

                Comment


                  #18
                  So, sell the house to the company for whatever it cost plus your capital gains tax exemption. Lend the company the money to do this.

                  Of course the company pays you interest in the loan, make this less than 18,500 so you don’t have to pay any tax on it.

                  You can inflate the rent above market rates because the 20 billion subsidy landlords get each year pushes up rents for everyone (or just take this money directly by renting to a benefit scrounger or, even better, a disabled tenant).

                  The company can deduct the interest you pay yourself from its profits (and various expenses). So the company should also end up with minimal tax to pay.

                  Don’t forget to go on an Internet forum and complain about how horribly cruel the government is to buy-to-letters.

                  (Note:IANAA this might not work)

                  Comment


                    #19
                    I looked at doing this moving personal btl to company name

                    In the end it was not worth it when you looked at the figures

                    You will need to pay cgt of the market value not the sale price On a 500k property which you bought for 200k that was nearly 80k paid upfront today

                    You need to pay sdlt on the market price so on 500k that’s currently 15k for
                    Second home owners and companies. Previously it was 25 plus
                    Mortgage rates (if applicable) are much higher for Ltd than personally held assets

                    And all of this for what benefit? So that you can offset the interest payment and avoid s24 and maybe regulate the income a bit??

                    It all made non sense in the end.

                    The only approach I have heard to reduce cgt is to put someone you trust as joint owner and gift them a percentage each year so that you use the cgt allowance. That seems to be allowed but getting through 300k will take many many years

                    Unfortunately btl is not a one way street and cgt Rates are likely to increase. It’s one reason why many are not buying anymore and trying to wind down their real estate assets

                    Comment


                      #20
                      Originally posted by GitMaster69 View Post
                      that approach is illegal ? What if i let my properties to my limited and limited would do Airbnb?
                      nothing illegal about it. GAAR is not about legality.
                      It's about using complicated (aggressive) setups solely for the purpose of tax avoidance.
                      See You Next Tuesday

                      Comment

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